Wednesday 06, December 2017 by Matthew Amlôt

CI: Amen Bank’s ratings affirmed

Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, today announced it has affirmed the ratings of Amen Bank, headquartered in Tunis, Tunisia. The Financial Strength Rating (FSR) is affirmed at ‘B+’.

The rating is supported by improved profitability and revenue, a relatively solid capital position (CAR), and access to funding. The rating is constrained by tight liquidity, weak loan asset quality, provisioning coverage which is at the prescribed level by the Central Bank of Tunisia and managed in respect to tax administration, and a challenging operating environment. Amen’s Long- and Short-Term Foreign Currency Ratings (FCRs) are affirmed at ‘B+’ and ‘B’, respectively. The Outlook for all ratings is maintained at ‘Stable’. The Support Rating is maintained at ‘3’, reflecting a reasonable level of support expected from either the majority owners and/or the Tunisian authorities. As the fourth largest bank in Tunisia, it is likely to be considered systemically important.

Amen Bank has a solid franchise in Tunisia, with high market shares in both deposits and loans. However, the last few years have been challenging for the Bank, as has been the case for all Tunisian banks. Results in 2016 were generally better with much improved operating and net profit together with associated return metrics. This was due to improved gross income (mainly from its securities portfolio but this includes interest from treasury bills). Results in H1 2017 continued to show improvement in profit and loss.

The Bank’s two principal weaknesses are its loan asset quality and liquidity. NPLs continued to grow in 2016 (albeit slightly) and again in H1 2017. The NPL ratio is at a very high level –way above the private bank average in Tunisia – and coverage is low. The major NPL sector is the tourism sector. Associated industries have also been impacted. Asset quality pressure is also due to low economic growth. Liquidity remained weak in 2016 and again customer deposits declined. The fall in customer deposits was connected to a drop in more expensive time deposits; in part this reflects the Bank’s strategy of trying to reduce its current high cost of funds, however, it also reflects a very tight customer deposit market in Tunisia. The net loans to customer deposits (and stable funds) ratio remains high. Some improvement has been recorded in the Bank’s liquid asset base. Amen Bank’s CAR is also reasonable for a Tunisian bank.

In 2013 the IFC acquired a 10 per cent stake in Amen Bank. The IFC recently announced its intention to sell the entire holding. It is expected that the Amen Group will acquire the full stake (very recently, in November 2017, it purchased half the IFC stake). The partnership over the years provided technical assistance in a number of areas, including risk management and governance.

Amen Bank was founded in 1971 as Crédit Foncier et Commercial de Tunisie. Its principal shareholder is the local Amen Group (owned by the Ben Yedder family), whose ownership of the Bank constitutes a controlling interest. At end June 2017 Amen had total assets of TND8.5 billion ($3.5 billion).


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